The #1 Must Have App for Fixing Your Credit Score
A FREE app to track my credit? Yes Please!
So I have mentioned the Credit Karma app a few times because it is awesome and I personally use it on a regular basis. I wanted to give an in-depth review to really show you how you can use it to keep track of your credit and fix those annoying credit dings.A FREE app to track my credit? Yes Please! #creditkarma Click To Tweet
*Note the images presented within this post are from a dummy account for review purposes.*
Go to Creditkarma.com, then go to the “sign up for free” tab at the top right. As you can see by the image, there is a lot you can do with CreditKarma!
You are going to need a few things when you initially sign up, an email that you can verify, but most importantly the last 4 digits of your social security number.
This is the key to pulling your credit history. Lastly, you will need to confirm your email.
Did you read my step-by-step guide to fixing bad credit and what the difference between hard and soft inquiries are? If not, you can check that out here, but bonus-signing up for CreditKarma is considered a soft inquiry and will not harm your score!
Let’s get down to business
As you can see right on the dashboard homepage of your account, your credit score is displayed loud and clear! Obviously, this person should go back and read the post on how to fix bad credit!
If you click on the “view score details” it goes into giving you an overview of 6 major credit factors:
- Credit card usage
- Payment history
- Derogatory remarks
- Credit age
- Total accounts
- Hard Inquiries
You can click into each one of the boxes for further information. Green is good, red is bad!
Let’s take a quick overview of each of these credit factors and what you can do to fix them.
Again if you haven’t read the post on how to fix your credit I talk about these factors in depth and how to fix them so that you can raise your credit score in as little as six months!
Credit card usage
Credit card usage is the amount you have in credit card debt compared to how much your total credit limit is, or your total amount owed.
You want to keep this around 30%. So if your total available credit limit for all your credit cards is $10,000, you want to keep your total balance of your cards at $3,000 or less.
If you click on the “view details” for the credit card usage, it will give you an overview that includes the overall percentage of credit card usage as well as a breakdown of each card, what is owed and the card limit.
Also, CreditKarma is great at giving little tips on how to fix things, it’s pretty much idiot proof!
This credit factor accounts for 30% of your overall credit score, so make sure you are working to pay down those credit cards!
This is what makes up the largest part of your credit score by 35%! Thankfully, it is also the easiest to manage.
This is a really great feature of CreditKarma. If you look to the right of the payment history percentage, you can see that if you actually did not pay a payment late you can file a dispute with the credit bureaus to get this taken off of your credit report.
Simply click on the little plus sign to the right of where it says “missed payment” and it will show you the payment history so you can see exactly where you missed the payment and the “dispute an error” link.
Or you can go to the Accounts tab at the top of the page and click on the account in which you feel there is an error. This will open up the account details and right below the history there is a large purple button to “dispute an error.”
Just make sure that you read the fine print, as it can be different between the three credit bureaus.
Now back to the dashboard and the 6 credit factors we were focusing on…
These are things like debts that have gone to collections or are in collections, tax liens, bankruptcies or civil judgments. Things that can stay on your credit report for 7-10 years, Wowza! These are not so easy to fix. So unfortunately if you had some hard times in the past and they are haunting your credit report there isn’t much you can do to fix them other than let them fall off over time and focus on the things you can fix.
These are not so easy to fix.
So, unfortunately, if you had some hard times in the past and they are haunting your credit report there isn’t much you can do to fix them other than let them fall off over time and focus on the things you can fix.
Although I couldn’t find an exact percentage as to how this affects your credit score, CreditKarma does tell us that is has a “high impact.” 🙁
Credit age refers to the average age of your open accounts, which has a medium impact on your credit score and accounts for about 15% of your overall score.
In a previous post, I talked about how if you pay off a card that you should not close it right away as this helps in two different areas. If you keep the account open and don’t use it, your credit card usage percentage will be in better standing. Your credit age is also positively impacted.
Ideally, lenders want to see that you have experience using your credit responsibly over time, 7+ years is a good timeframe to shoot for.
This is related to the types of accounts you take out AND how many you have accounts you have opened and closed.
This accounts for about 10% of your credit score. If you have a variety of accounts, such as revolving and non-revolving debt, it looks much better to lenders.
Also, if you are able to open an account, pay it off and close it, that also looks good. Just remember the point above, try to keep accounts open for 7+ years, but BE RESPONSIBLE!
I mentioned soft inquiries before, that is when you take a look at your credit score.
A hard inquiry is when you are applying for a loan or a credit card and a lender takes a look at your credit to determine if you are worth the risk to them. Although this has a relatively low impact on your credit score, you don’t want to go trying and applying for a bunch of credit cards at once or shopping around for mortgages and letting every lender run your credit.
This is not helpful to your score!
To help avoid getting too many hits for hard inquiries on your credit report, CreditKarma has a butt load of resources to see if you can get pre-approved for a certain type of loan before you make the jump to actually apply for it.
You can easily do this by going to the Loans tab at the top of the page and clicking on the loan you wish to get pre-qualified for from the drop-down menu.
It covers just about anything you would need, personal, home, auto, student, and business loans. From there you enter some simple information (depending on the type of loan you are looking at), such as years in business, annual revenue or income, if you are employed or self-employed, the loan amount you are looking for, if you are looking to refinance or purchase a new home, etc…
Plus if you filled out your profile all the way, a lot of the information you need should already be in there!
So many other resources!
Another great feature of CreditKarma is the recommendations they give you. For example, if you are over the 30% recommended for usage of available credit, it could suggest transferring the balances to a new card with lower interest rates.
Did you know that CreditKarma can help you to claim money you might be owed? YES PLEASE!Did you know there is $40 billion sitting in government accounts that belong to the people? #creditkarma Click To Tweet
Apparently, there is over $40 BILLION sitting around in state government accounts that belong to the people! YAY!!! So how can you get some and where does this come from? Here is another cute little illustration from CreditKarma as to how that works:
Here is another cute little illustration from CreditKarma as to how that works:
You simply enter your name, choose a state and city, if you would like, and go from there. If you have lived in multiple states make sure to check them all. And ladies don’t forget to check using your married/maiden names also! You can also check for your spouse or loved ones, just make sure to let them know if you find anything!
You can also check for your spouse or loved ones, just make sure to let them know if you find anything!
The only thing I found, while searching for my parents, was that someone with my parents’ last name that I may or not be related to had an amount under $100 for an Illinois state toll highway.
Which made me wonder if I should check every state I have ever driven through…
Credit Score Simulator
This is a pretty cool little feature. This shows you what your score would look like if…you opened or closed accounts, changed how you use your cards, changed your payments habits, or got new negative marks.
For example, if you wanted to know if you got an increase in your limit-without maxing out those cards-what would your score look like? How many points could it potentially increase?
There are lots of different scenarios with this, play around with it and see where you could fix a few things to increase your score.
Home affordability calculator
Looking to get a new house in the near future?
This is a simple calculator similar to many available online. Simply enter your gross monthly income, what your estimated down payment would be, your total monthly debt payments (this does not include things like your gym membership payment), and the estimated mortgage interest rate.
Just a side note, the CreditKarma calculator asks for monthly gross income, not annual. So for example, for someone who makes a gross income of $100,000/year ($8,333/month), has a down payment of $10,000, monthly debt payments of $1,000, and a mortgage interest rate of 6.25% this is what the affordability would look like for them:
Debt repayment calculator
The debt repayment calculator is another fun tool if you are looking to pay a consistent amount on your debt each month or to pay it off in a certain amount of time.
If you have debts of different interest rates though, you would have to calculate each one individually. It even breaks down how much you are paying for the principal balance and for the interest.
Here is an example if you had $10,000 in credit card debt with a 24.99% APR and you could afford to pay $1,000 each month towards this balance.
*Quick tip-if you could transfer this balance to a 0% APR card, not only would you save $1,332 but you could also pay off the debt in 10 months rather than 12!
Simple Loan Calculator
Need just a super simple loan calculator?
Enter in your loan amount, the interest rate and the number of years it will take you to pay it and out pops your monthly payments.
Amortization is the gradual reduction of a debt over a given period. Our amortization calculator will amortize (show the reduction) your debt (such as a mortgage) and display your payment breakdown of interest paid, principal paid and loan balance over the life of the loan.
It comes as a surprise to some that most of your initial payments on a loan are used to pay interest. For example, in a 30-year mortgage over 83% of your payments are used to pay down interest in the first year, while only 3% of your payments are used to pay down interest in the final year. This is the primary reason why little equity is built in the first few years of a mortgage. -CreditKarma
For example, if you have a $100,000 loan with an interest rate of 6.25% over 30 years your amortization will look a little like this:
It’s just crazy to look at! Also, something you are probably not thinking about fully when you are buying a house, but you end up paying over TWICE as much when you include interest, holy moly!
Ok, so although I LOVE CreditKarma and I think it is an amazing resource, there is one, I would call it an annoyance.
There is a credit card offer on just about everything you look at. Although some people need cards to either build their good credit or to get themselves out of a financial bind, it can be kind of annoying that they have all these offers.
Especially if you are someone who tends to be impulsive and can have a hard time keeping your credit and spending under control. If you know this is an issue for you, be very careful or just don’t sign up for it at all.
Although I also have to say considering this is a free app and website that offers LOADS of info and resources, I am assuming that they are able to keep it free because of the card offers they show. So although I may find it annoying, I can understand it necessity.
As you can see CreditKarma has a TON of resources to help you keep track of and improve your credit.
There is also a community to turn to when you have questions about auto insurance, bankruptcy, scores, and so much more. They also have a library of in-depth articles to help you better understand “complicated credit and financial concepts.”
Also, don’t forget that CreditKarma is available in app form for your smartphone and tracking on the go!
So check out CreditKarma today so you can start keeping better track of your score and learning how to make your credit work for you.
Are there any apps, websites, or other tactics you have used for tracking your credit that you LOVE? Please share!
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